Don’t Turn Down Contracting Business in Difficult States

One of the most difficult things for recruiters who place contractors and run their own back-office is keeping up with the growing number of state, federal, and now even local employment laws.  In some states, the employment, payroll, and tax laws are so complicated that recruiters have started avoiding making contract placements there at all.

Here are three most difficult states in which to place contractors:

Many would say California is the MOST difficult place to employ contractors.  For starters, they have one of the most complex wage and hours codes that include very generous overtime rules for employees.  Overtime (and even doubletime) is based on the number of hours employees work in a day and the number of workdays in a workweek.  Federal law only requires overtime (time and a half) for hours worked in excess of 40 in a workweek.  California also sets its own minimum wage and establishes rules for how and when employees are to be paid.  They have laws governing E-Verify, credit checks, and more.  Moreover, XpertHR’s Payroll Misery index named California the worst state for employment tax laws, and a number of localities within the state have their own employment laws, as well.  San Francisco, for example, is one of a growing number of localities that have their own paid sick leave (PSL) laws.  These PSL laws are difficult for recruiters and employers because they have to determine if they must comply, how to track the leave, and how to administer the program.
New York

New York is a lot like California in many ways.  It also has been named as one of the worst states for employment tax laws by XpertHR.  The state also has its own minimum wage law, and it restricts credit checks, just like California.  Like San Francisco, New York City has established a PSL law, and it was also the first city to ban discrimination against the unemployed.  Back on the state level, employers in New York are required to notify newly-hired employees in writing of their hourly rate, overtime rate, and payday.  For contractors, this requirement is fulfilled through the New York LS51 Form.
New Jersey

New Jersey ranks as the third-worst state for employment taxes, according to XpertHR.  It also is one of the most popular for paid sick leave laws, as two cities (Jersey City and Newark) have such laws.  New Jersey also has the distinction of being the first state to ban discrimination of unemployed applicants.

Recruiters must ask themselves if it is worth the extra time, money, and frustration to accept contract placements in these and other difficult states.  The answer depends on a number of factors, including how much business is available, the profit margin, and more.

In most cases, though, it’s never a good thing to turn down business.  An alternative is outsourcing the employment of your contractors (or at least those in particularly difficult states) to a contract staffing back-office provider that will handle all of the employment tasks and legal compliance for those contractors.

That way, you can enjoy the additional revenue from taking placements in these states WITHOUT the state compliance frustration.

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